Rising interest payments, uplift spending strained Pakistan's fiscal position in early FY27: ministry
ISLAMABAD: Despite a massive 90 per cent cut in subsidies and higher-than-targeted revenue collection, Pakistan’s fiscal and current account buffers weakened at the beginning of the current fiscal year (FY27) owing to an almost 37pc increase in interest payments coupled with greater development spending. The “overall fiscal surplus narrowed to 0.8pc of GDP (Rs1.198 trillion), compared with 1.7pc…
Pakistan's fiscal position weakened in early FY27 due to rising interest payments and increased development spending, despite a significant 90% reduction in subsidies and higher-than-targeted revenue collection. The Ministry of Finance's Monthly Economic Update & Outlook report revealed that the fiscal surplus narrowed to 0.8% of GDP, down from 1.7% in the same period last year.
The primary surplus also declined to 1.6% of GDP from 2.3% in the previous year. The government remains committed to maintaining fiscal stability through stronger revenue mobilization and prudent expenditure management. Despite the fiscal challenges, the government expects economic recovery supported by better crop prospects, selected manufacturing industries, and improving external earnings.
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